What is scarcity marketing and should you use it?

As a relative newcomer to the digital marketing world, I've decided to write a series of 'beginner's guides' to uncover what is meant by certain terms, trends and technological advances in digital; being both a travel guide and a personal investigation.

Here I’ll be answering the following questions: What is scarcity? Why should you use it? Are there good and bad practices? In a tone of voice that has been described as both 'helpful' and 'not too rambling'.

Scarcity in marketing means to use the fear of shortage to sell more.

It’s a fairly simple psychological premise. “We don’t have many Furbies left I’m afraid, you’ll have to buy it now if you don’t want to ruin your child’s Christmas” is the simplest and most extreme example.

However if we think of scarcity in terms of providing transparency about how much stock is left of a particular item, then it’s a very helpful, positive tool.

Scarcity can also increase the perceived value of the item or service you’re providing.

Your products can become that much more precious in the eyes of a customer. The fear that there is only a limited supply will make the customer purchase faster and possibly with less thought.

Which leads to the argument that scarcity can also be manipulative and in some circumstances, exploitative.

Before we get to the more frustrating end of scarcity, let’s take a look at some of the positive uses.

Death Waltz

This boutique record label releases newly remastered LPs of classic soundtracks and it uses scarcity very well.

Death Waltz produces one-off pressings of coloured vinyl editions, normally around 1,000 copies, and it’s always clear how many are left.

In fact this worked so well, I put that soundtrack in my basket.

However Death Waltz also produces larger runs of non-limited editions, so even if you miss out on the special coloured edition, a customer still won’t leave disappointed.

Amazon

Amazon is the king of scarcity.

Check out the call to action ‘order soon’.

Amazon is also good at being honest about whether there is more stock on the way though.

It would be very easy for Amazon to leave it at ‘only 7 left in stock – order soon’ to shore up artificial purchase desire.

Threadless

Threadless keep a live stock indicator running under each size available.

Threadless also make just enough of its limited runs of products to not leave regular customers disappointed, but also gives plenty of warning if a t-shirt is selling out fast.

There’s also so much choice on the website that it’s impossible to leave disappointed that you didn’t get something that appealed to your taste.

Another nice touch is that you can sign up to be emailed as soon as a t-shirt you missed out on goes into reproduction.

Threadless has done a great job of keeping frustration and disappointment out of its scarcity marketing. Which brings me to my next example, and the reason why I wrote this article in the first place.

Mondo Tees

Mondo Tees is an Austin, Texas based company that creates limited edition screen printed posters of classic films by contemporary artists.

Ones that look like the Jaws poster featured at the top of the article and this...

and this…

Basically film nerd catnip.

They are produced in limited runs of 400-500, priced from $40-$90.

Here’s the kicker. Mondo Tees only announce when a poster is going on sale the day before via a newsletter and Twitter. You aren’t told what time they go on sale, until the second that Mondo Tees tweets from its account @MondoNews.

So you have to follow the Twitter account all day long waiting for the ‘on sale’ tweet. Although if you’re clever you’ll realise that you only need to be follow from 4pm GMT because of the time difference.

I’m pretty crazy about The Lego Movie so this was a must-have. I followed the link, managed to get the poster into a shopping basket (I had tactically logged-in to my account earlier) and then… nothing. On the payment screen there suddenly appeared a message saying ‘item unavailable’.

If any of my colleagues are reading this, this is why I bashed my fists on the table and cried “NO!” last Friday afternoon. Apologies.

This is the general tone of comments underneath the ‘sold out’ tweet.

I can’t help but agree.

The twitter account has 53,000 followers, all potentially being driven to the Mondo Tees website within that minute long timeframe. It’s a lot for the site to handle, and a hell of a lot of competition to beat off if you’re a customer.

Every week I fall for this. Every week I get my heart broken. Mondo did a limited run of Hitchcock posters last week, and my wedding this July has a Hitchcock theme (don’t ask), I thought they’d be perfect for decoration. I didn’t get a single one.

I could just unfollow the Mondo News Twitter account to save myself some anguish. I threaten to do this every time. I never do though.

There’s an argument to say that if Mondo Tees just produced more posters then not only would it spare customer frustration but it would also make more money.

However if Mondo Tees started production runs numbering into the thousands, the posters would lose their commodity. They wouldn’t be as rare. They wouldn’t be as scarce. People wouldn’t care so much. I wouldn’t care so much.

That’s a frustrating truth in of itself and one that speaks more of human nature than marketing.

Surely just by doubling a print run to 1,000 though, Mondo Tees would double its money, double the customers leaving its site happy and also retain its air of ‘exclusivity’.

Or be like Threadless, keep the limited edition runs but offer a bigger range of products so that at least customers can leave with something to their taste.

Record Store Day is a great offline example of this. I get up at 4am every year in April to queue up in the cold outside my local independent record shop to be in with a chance of obtaining limited edition records made available only on that day. Yes I miss out on a couple of rarities, but the list of releases is so long and varied that I always leave satisfied, if a little cold and tired.

My advice to any company wishing to use scarcity as a model: use it responsibly. There’s a fine line between creating the perception of value through scarcity and just annoying shoppers.

Further reading for beginners

During my first year at Econsultancy I’ve been making a point of writing beginner’s guides to any new terms or phrases I find particularly baffling, or that I might suspect other people may find baffling too.

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